After Years of False Hopes, Signs of a Turn in Housing
By BINYAMIN APPELBAUM
Published: June 27, 2012

WASHINGTON — Announcements of a housing recovery have become a wrongheaded rite of summer, but after several years of false hopes, evidence is accumulating that the optimists may finally be right.

The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames.

Joe Niece, a real estate agent in the Minneapolis suburb of Eden Prairie, said he recently concluded a streak of 13 consecutive bidding wars over homes that his clients wanted to buy. Each sold above the asking price.

“I just had a home that wasn’t supposed to go on the market for two weeks sold before it even went on the market,” Mr. Niece said. “It’s definitely a lot different than what we saw” during the last few summers.

Like the economic recovery that began three years ago, what happens next is likely to prove a little disappointing. The pace of recovery will probably be slow, and the prices of many homes will continue to decline.

Millions of people remain underwater, owing more on their homes than the homes are worth, and unable to sell. Millions of families still face foreclosure. And a setback in the still-fragile economic recovery could easily reverse the uptick in housing prices, too.

But roughly six years after the housing market began its longest and deepest slide since the Great Depression, a growing number of experts and people who actually put money into housing believe the end has come.

“Our sense is that the market is recovering, and we’re extremely confident that it’s not going to get worse,” said Ronnie Morgan, a San Diego real estate professional who recently created a $10 million partnership to buy foreclosed homes. The group, Alegria Real Estate Funds, already has bought about 20 homes in suburban communities, most of which they plan to hold as rental properties.

“It feels very much like we’ve hit a bottom and we’re starting to come off of that bottom,” said Stuart Miller, chief executive of Lennar, a major national home builder based in Miami. The company said Wednesday that second-quarter profits were higher than expected, and orders for new homes rose 40 percent.

The trend is clear in the data. The widely respected S.&P./Case-Shiller index reported earlier this week that sales prices for existing homes rose in April for the first time this year. Several other measures, including a seasonally adjusted version of the index, show that price increases began in February. The pace of housing construction has increased. And the National Association of Realtorssaid Wednesday that pending home sales climbed to the highest level since the end of a federal tax credit for first-time buyers in September 2010.

This is the fourth consecutive year that the housing market has shown signs of revival, and each previous episode ended with prices renewing their downward slide.

But with each passing year, an eventual recovery has grown more likely. Prices have continued to fall, and the economy has continued to recover, a combination that has expanded the pool of potential buyers. The population has continued to grow while few new homes have been built.

Basic indicators of market health that bulged during the bubble, like the ratio of housing prices to income, have returned to more normal levels.

Government efforts to help homeowners have intensified, allowing more borrowers to refinance or avoid foreclosure.

“All bets are off if anything happens to the economy, but apart from that, I think the fundamentals look better than they’ve looked in 17 or 18 years,” said Richard K. Green, a professor of real estate at the University of Southern California.

Professor Green cited the combination of rising rents and low mortgage rates as a powerful inducement to potential buyers, both renters who would prefer to own and investors who want to become landlords.

“Compared to a lot of other investments right now this looks pretty good,” he said.

The influx of investors is a major reason that the market is looking stronger. Mr. Morgan, 56, built apartments before the housing crash. In 2010, seeing a new opportunity, he and some friends started bidding at the foreclosure auctions then held on the steps of the San Diego County Courthouse.

At first they bought properties to renovate and resell. Now they are focused on potential rental properties in the kinds of gated, planned communities in suburban San Diego that once were populated almost exclusively by people who owned their homes. Some of their tenants are former homeowners.

And competition has increased. The auctions were moved from the courthouse steps last year because the crowds had grown too large.

“There’s not a whole lot of other places to put your money,” Mr. Morgan said.

There are still reasons for caution. An unusually warm winter seems to have given a temporary and misleading boost to a range of economic indicators.

The pace of economic growth remains slow and fragile, shadowed by the risk that politicians in Europe and Washington will fail to address looming problems.

And the rise in prices is happening despite the vast number of vacant houses awaiting buyers, up to two million more than the normal level, with several million more houses still at risk of being foreclosed.

But this “shadow inventory” is not distributed uniformly, according to a new analysis by Goldman Sachs. Even within metropolitan areas like Phoenix, the vacant houses are clustered in less desirable neighborhoods, while buyers are seeking homes in areas where there are few vacancies.

Under these circumstances, the researchers concluded, “It is possible for us to see both house price increases and excess housing supply at the same time.”

Indeed, in a growing number of areas demand for homes is outstripping supply.

Mr. Niece, the Minnesota real estate agent, said he and his partner had seen their book of listings decline from about 120 properties to 70 properties, about 45 of which already are under contract.

“I have buyers every single day complaining that they can’t find houses,” he said.

Driving through a neighboring suburb last week, Mr. Niece said that he passed a sign outside another real estate office that read, “The market is great. We’ve sold all of our inventory. We need listings.”

(Reuters) - Consumer spending stalled in May as purchases of autos flagged while confidence dropped to a six-month low in June, the latest signs of trouble for the economy.

Although another report on Friday showed manufacturing activity in the Midwest picked up this month, factories saw a modest decline in new orders.

The Commerce Department said consumer spending was unchanged in May, failing to rise for the first time since November, after nudging up 0.1 percent the prior month. Consumer spending accounts for more than two-thirds of U.S. economic activity.

"We're seeing consumer spending come off the boil a bit over the last few months. That's to be expected, given uncertainty across the board and the troubling headlines we've seen," said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington.

Spending could weaken further as uncertainty generated by the debt crisis in Europe and an unclear fiscal policy path at home force Americans to scale back on consumption.

A separate report showed the Thomson Reuters/University of Michigan's consumer sentiment index fell to 73.2 in June from 79.3 in May. While the outlook for the economy has darkened in recent months, it continues to expand modestly.

A third report showed factory activity in the Midwest ticked up in June, with employment rising to its highest level since February. New orders, however, edged down.

The Institute for Supply Management-Chicago business barometer rose to 52.9 this month from 52.7 in May. A reading above 50 indicates expansion in the regional economy.

"The message from Chicago is that things are not spiraling down out of control," said Dean Maki, chief economist at Barclays in New York.

The reports had little impact on U.S. financial markets, with investors focused on developments in Europe. Euro zone leaders agreed to allow a rescue fund to be used to stabilize the region's banks, sending stocks on Wall Street rallying.

U.S. Treasury debt prices fell, while the dollar weakened against basket of currencies.

The economy expanded at a tepid 1.9 percent rate in the first quarter.

While weak gasoline prices contributed to holding down spending last month, they put downward pressure on inflation. A price index for personal spending fell 0.2 percent in May, the first decline in a year. The index was flat in April.

In the 12 months through May, the PCE index was up 1.5 percent, the smallest increase since January last year. It increased 1.9 percent in April.

A core measure that strips out food and energy costs advanced 0.1 percent last month after rising by the same margin in April. In the 12 months through May, the core PCE rose 1.8 percent, slowing from 2.0 percent the prior month.

Last month, spending on long lasting goods, like autos, fell 0.4 percent after dipping 0.2 percent in April. Auto sales had been boosted by pent-up demand after last year's earthquake and tsunami in Japan left showrooms bereft of popular models.

Weak income growth as the economy struggles to generate enough jobs to cut into high unemployment is also curbing spending. Income rose 0.2 percent after a similar gain in April. The increase was in line with economists' expectations.

The amount of income available to households after accounting for taxes and inflation, rose 0.3 percent. That followed a 0.1 percent gain in April.

With spending less than income, the saving rate rose to 3.9 percent from 3.7 percent the prior month.

But Congress, the one that claims to hate it and to repeal it, has had to fund it since it was passed to make it ready for that point. You'd think they'd just refuse to fund it.

__________________My Message to President-Elect Donald Trump:America did NOT became great because of what government did. America became great because of what the U.S. Constitution prevented our government from doing. The people made America great.

most everyone sees him as nothing more than ABO. He is one of the weakest candidates to ever run. You have become an amusing groupie. Clearly whoever the right props up becomes your hero~

Well, I was leaning toward Johnson but I may just consider Romney now for real. Afterall, a 50% chance of an Obamacare repeal is better than no chance with Obama. I really hate the warmonger wing though with them now going on about Russia and even China getting cornered for world hegemony. But Obama is only a 50% chance there too, leaving me with another protest vote just to piss off the Rs with a message. I was hoping the SC would have taken care of this issue for me. I thought there was a chance that the mandate would not hold up as a mandate—but that Kennedy wouldn't take the whole thing out of play. I just thought with that, congress and the president would know it couldn't work without it then. Sooo.....if Romney is making this pledge it's iffy, even more so with his "replace" slogan. With enough of the right kind of Rs in congress to impose their will the odds are better but not great. So I am going to reconsider my vote now. Probably won't decide until the last minute.

__________________My Message to President-Elect Donald Trump:America did NOT became great because of what government did. America became great because of what the U.S. Constitution prevented our government from doing. The people made America great.

I wouldn't bring my business to him. He probably helps lefties and corporatists get rich off govt though.

__________________My Message to President-Elect Donald Trump:America did NOT became great because of what government did. America became great because of what the U.S. Constitution prevented our government from doing. The people made America great.

Driving through a neighboring suburb last week, Mr. Niece said that he passed a sign outside another real estate office that read, “The market is great. We’ve sold all of our inventory. We need listings.”

Realtors ALWAYS say that! It's good for business. I've seen then say it up to the point of collapse.
I think some regions are doing better but it's by region not some macro market phenomena.
When it does pick up, expect more inflation, to factor in.

__________________My Message to President-Elect Donald Trump:America did NOT became great because of what government did. America became great because of what the U.S. Constitution prevented our government from doing. The people made America great.

Well, I was leaning toward Johnson but I may just consider Romney now for real. Afterall, a 50% chance of an Obamacare repeal is better than no chance with Obama. I really hate the warmonger wing though with them now going on about Russia and even China getting cornered for world hegemony. But Obama is only a 50% chance there too, leaving me with another protest vote just to piss off the Rs with a message. I was hoping the SC would have taken care of this issue for me. I thought there was a chance that the mandate would not hold up as a mandate—but that Kennedy wouldn't take the whole thing out of play. I just thought with that, congress and the president would know it couldn't work without it then. Sooo.....if Romney is making this pledge it's iffy, even more so with his "replace" slogan. With enough of the right kind of Rs in congress to impose their will the odds are better but not great. So I am going to reconsider my vote now. Probably won't decide until the last minute.

You repeal the tax you 'neuter' Obamascare. With this being an election year this will have a chance to pass in the Senate and if does pass, Obama will VETO IT and thus seal his own fate not being re-elected and then after the election we will hopefully get totally rid of it.

__________________"All real Americans love the sting of battle and may God have mercy on my enemies because I wont".

'Progressivism' is nothing more than a dressed up co-opted term for 'Marxism'.